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KV Asia in Singapore aged care buyout

ONE IN EVERY THREE PEOPLE IN Singapore will be aged 65-plus by 2050, based on current birth rates and without an influx of youthful migrants. The country’s median age will rise to 55, up from the current level of 39. Just over the next seven years, the number of people aged 60 and over will increase to 1.25 million from 850,000.

Fast-aging populations place huge pressure on the infrastructure required to support them. Singapore has only 10,000 nursing home beds and even if the government succeeds in adding a further 6,600 beds by 2020, demand will likely still outstrip supply. And that is before considering the impact of rises in cases of dementia or other conditions that require 24-hour care.

The government has been trying to shift more of the burden to private operators since the 2000s and they now account for 40% of the market, with voluntary welfare organizations accounting for the rest. KV Asia Capital expects the private sector share to increase and this formed part of the thesis for the Southeast Asia focused PE firm’s recent acquisition of nursing home provider Orange Valley Healthcare.

“One of the key factors in our investment decision is the favorable supply and demand dynamics of available nursing beds versus the rapidly aging population in Singapore,” says Karam Butalia, executive chairman of KV Asia. “We see multiple potential opportunities to grow the business either organically or via acquisitions.”

KV Asia did not disclose the size of the investment but with a debut fund of $263 million, it tends to write equity checks of $25-75 million, with the capacity to go larger in select cases.

Founded in 1993 by Soo-Sam Tan, Orange Valley has grown from a single nursing home to six facilities with more than 1,000 beds and 500 staff, offering nursing home services, home care services and ambulance services. Butalia adds that KV Asia looks to acquire high-quality companies at reasonable value and use them as platforms for growth. Orange Valley, with its well-established management systems, was seen as a good fit.

The origins of the transaction are complex and KV Asia declined to go into details. What is publicly known is that last year Singapore listed G.K. Goh Holdings, which was an investor in Orange Valley, acquired a stake in a Domain Principal Group, leading Australian provider of residential aged care services.

Tan took legal action to try and block the investment, a court summons claiming the deal violated an agreement that prevented G.K. Goh from investing in a competing business to Orange Valley. The summons was dismissed in January. AVCJ understands that KV Asia’s acquisition facilitated G.K. Goh’s exit from the business.

KV Asia was founded by Butalia, the former global head of Standard Chartered Private Equity, and Vibhav Panandiker, previously of SCPE and J.P. Morgan Private Capital Asia.